In 2023, many studios have undergone a significant shift in their streaming strategy, transitioning toward a more practical and cost-efficient approach to content that speeds up their journey to achieving profitability in the streaming sector.
Last year's merger for Warner Bros. Discovery has reinforced their commitment to prioritizing cost-saving synergies, aiming for a $3.5 billion target. Analysing the scripted TV trends on Warner's US services, using Show Tracker, reveals their pre-merger focus on expanding Max's growth
The launch period of Max, combined with the production delays wrought by the early days of the pandemic, prompted Warner to acquire several series from third party sources to supplement their Max Original slate in the 19/20 and 20/21 season. As production subsequently stabilised Warner has since put more effort into producing its own Max Originals, with over half of the new Warner series last season being commissioned by the SVOD. Commissions from Warner owned Pay TV services (largely HBO) have remained relatively stable, with any HBO linear series still set to be a value add to Max as well. Despite the effects of the strike on production, Warner has not replicated its Covid strategy to prop up its content so far, with this activity more focused on its Pay TV services, such as the acquisition of ‘The Lazarus Project’ for TNT. Overall new commissions are down but the 2022/23 season included multiple high-profile returning shows including the final season of ‘Succession’. Certain marquee returning and upcoming titles such as ‘House of the Dragon’, ‘Industry’ and ‘’Dune: The Sisterhood’ being able to continue production despite the ongoing SAG-AFTRA strike due to their reliance on UK talent under the separate union Equity.
A change in strategy for Warner may very likely result in less shows overall being commissioned by the studio’s slate of services in the coming seasons and a deeper reliance on safer bets for big series. One way to ensure this is to adapt from an already established IP, which it intends to do with the ‘Harry Potter’ franchise once again through the development of a TV series based on the books, 12 years after the original cinematic adaptations concluded.
Warner has been adapting series from other IP sources for some time, with this activity both increasing and diversifying in recent seasons. Many TV series can have multiple adaptation sources, with the Max Original ‘Peacemaker’ for instance spun off from the movie ‘Suicide Squad’, while also drawing from its titular character’s appearance in DC Comics.
The IP source for Warner’s TV adaptation continues to diversify, with one of HBO’s most successful series so far in 2023 being ‘The Last of Us’, adapted from the PlayStation video game of the same name. Its popularity with both critics and audiences has successfully broken a long chain of ill-performing video game adaptations, paving the way for more to come. Sony, who produced the series alongside Warner, are likely to be a large source of these with the formation of PlayStation Productions, whose emphasis is on the adaptation of Sony’s PlayStation video games into TV series and films.
As Warner Bros. Discovery looks to make cost-savings in the billions it is likewise less than willing to give up on what has historically been extremely lucrative licensing revenues from the sales of its series to international services. For many years HBO content has been sold as part of volume deals internationally, with many services such as OCS in France, Foxtel in Australia, or Sky in the UK, Germany and Italy serving as the international ‘homes of HBO’.
Vertical Integration of Warner content was largely limited to markets where Warner already had a service presence, with Max replacing the likes of HBO Nordic in Sweden, HBO Espana in Spain and HBO Go in Poland eventually. These services had already long served as guaranteed homes of Warner content in their respective markets. In this pre-merger world where growth of Max was the then WarnerMedia’s highest priority, their existing volume deals were the main obstacle in the way of the SVOD’s international expansion.
Warner Bros. Discovery has proven their change of priority in their actions. Back when it was WarnerMedia as a volume deal in one market would end Max would launch in its place almost day and date. One such example being the Netherlands Max which launched the day after Warner’s existing volume deal with VodafoneZiggo expired. Now however Warner is either renewing their volume deals, as it has done with U-Next in Japan, OSN in the middle east and Foxtel in Australia, or creating new ones like it has with Amazon Prime in India, following the expiry of its existing deal with Disney+ Hotstar. This change in direction is not universal but is dependant on the market. After launching Warner Pass in France as an Amazon Channel, Warner has since confirmed that it plans to bring Max to the market in the summer of 2024.
While Warner may have once been aiming to match the likes of Disney with both the reach of its SVOD and its level of vertical integration, the volume deals that once held this strategy back have now served to be a quite useful means to prevent the studio from over investing in the growth of Max. As it now feels pressured to find a more cost-effective and pragmatic approach to its content strategy, continued engagement in volume deals, alongside a pragmatic approach to the international expansion of Max, will help to provide an extremely lucrative source of revenue for the time being.
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